Three quarters of client organisations emerged from the COVID crisis with more ambitious corporate goals, the result of realising that genuinely transformational change was possible, albeit under extreme conditions. Chronically short-staffed, most senior executives also realised that there was little possibility of their being able to achieve their objectives without help—which in turn led to global growth across the professional services sector of around 11% in 2021. By contrast, we’re forecasting growth of around 8% in 2023, as organisations trim their budgets.

In this environment, a professional services firm’s ability to target clients with a higher-than-average propensity to spend is critical, but the profile of buyers who fall into this category is changing.

The key hallmarks of big spenders in 2023-2024

• They’re more senior: Sixty-four percent of CxOs say they expect to spend more on consulting services, compared to 50% of departmental heads.

• They already rely on external support: Seventy-one percent of clients that have made heavy use of outside help in the past anticipate spending more in the future; only 27% of organisations that historically haven’t spent much say the same.

• They have experienced a significant change in the external environment in the last few months: Seventy-eight percent of organisations that described their operating environment as having “significantly improved” say they’ll spend more on external support, but so do 53% of those that say the environment has become “significantly worse”. By contrast, only 42% of clients that haven’t seen much change expect to spend more.

• They are worried about the future: Of those clients who indicated reduced business confidence as a result of the macroeconomic climate, almost 70% say they will use more consulting in the next 12 months.

• They lack critical capability and/or capacity: Of those who say they already have the right workforce in place, 55% say they'll spend less on consulting support; just 16% say they'll spend more.
• They want imaginative solutions: Clients that expect to spend more are twice as likely as those that expect the opposite to anticipate investing in business model transformation over the next three years (35% compared to 17%) and are more than three times as likely to be considering inorganic growth options in the short term (38% compared to 11%). Big spenders are more likely to be looking for radical solutions and want consultants to have a fast, concrete impact; they’re bringing in consulting support because they’re dealing with issues they have no experience of, and/or simply have more work to do.

All this has an impact on the types of consulting services clients are likely to buy.

• Forty-eight percent of clients that say they’ll spend more on consulting over the next year believe their technology spend will also increase in the next 18 months, just over the twice the rate among clients that say they’ll spend less (see figure five.)
• Twenty percent of those that anticipate spending more believe that technology will help them be more agile; only 8% of those that say they’ll spend less think that’s the case.
• Seventy-nine percent of clients that expect to spend more on consulting believe their organisation faces an existential threat if it doesn’t update its systems as soon as possible.

As we noted earlier this year, technology is now quite clearly clients’ main area of focus. But this new analysis suggests that, alongside technology, clients with the highest propensity to spend are also likely to be buying strategy and productivity improvement support.

In figure six below, we categorised survey respondents into two personas, based on their expectations around the level of external support they plan to use in the next 18 months. The data itself comes from a question we ask about the areas where they’re most and least likely to use external support (they may, for example, be planning to do a particular type of work internally). We’ve then ranked clients’ responses for the most net positive (most likely to involve consulting support minus least likely).

Technology strategy is the #1 service both types of clients expect to buy. However, clients that anticipate spending less on external support are more likely to direct their limited budgets towards risk and data & analytics than their high-spending counterparts. Meanwhile, clients belonging to the latter group are more likely to use some of their larger budgets on strategy and productivity improvement, although they too will spend on risk and data & analytics.

In other words, it’s going to be important for professional services firms to target the high propensity to spend group, not just because they will spend more, as they have done in the past, but because they’re also going to be spending on a more diverse range of services.